Understanding Uber: Breaking Down The London Driver Numbers

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The question of just how many Uber drivers there are in London has been at the centre of the current debate. Not least because Uber themselves have made it so.

Indeed the “40,000 jobs” figure received not one, but two mentions in Uber’s immediate statement after the decision had been made.

3.5 million Londoners who use our app, and more than 40,000 licensed drivers who rely on Uber to make a living, will be astounded by this decision.

By wanting to ban our app from the capital Transport for London and the Mayor have caved in to a small number of people who want to restrict consumer choice. If this decision stands, it will put more than 40,000 licensed drivers out of work and deprive Londoners of a convenient and affordable form of transport.

To defend the livelihoods of all those drivers, and the consumer choice of millions of Londoners who use our app, we intend to immediately challenge this in the courts.

That 40,000 figure is one that was quickly picked up by the media. It has been quoted extensively ever since. Yet in hardly any cases has it ever really been analysed in detail. Instead it has simply been presented as something between a soundbite and an indisputable fact.

Both of those are dangerous things to do, because it is not an independent number. Whilst we don’t doubt that it is accurate in some way, we also don’t doubt that Uber selected a figure that would best supports their current stance (we’ll look at why TfL haven’t deployed a counter-figure in a future article).

This is not to say that Uber haven’t been prepared to provide a little bit more context on how it was calculated, just that very few people seem to have done so (credit to the Telegraph who clearly did so themselves). In fact, according to Uber, this figure represents roughly the number of drivers who have completed four trips in London within a sampled month.

The trouble is, that context yields more questions than it does answers. Most importantly: does that number accurately represent the number who would be ‘put out of work’ by Uber’s departure from the marketplace? As part of our continuing look at the economics of Uber and how the model works both for the company and its drivers in London, we intended to take this number, compare it with other public data and work that out (roughly at least).

The problem is, the numbers don’t seem to work.

It is not our intention for this post to be seen as a ‘gotcha’. It is entirely possible we have missed something. But if we have, we can’t see it. So following on from our look at why the current debate isn’t about the app and before we move on to look at the economics, we thought it best to pause and look at the maths – because they yield some rather surprising possible conclusions.

Constant one: The number of drivers

The source for this figure is easy and barely needs mentioning – the repeated statements by Uber about number of drivers affected.

Total number of drivers: 40,000

Constant two: The total pot of money drivers make

The accounts for Uber London Ltd can be found on Companies House these cover the period up to December 2015.

In these, ULL declare sales of £23m. If we assume this corresponds to their share of the fare revenue, then at an 80/20 split (the rate Uber launched at) this leaves a 2015 driver earnings ‘pot’ of about £92m.

The number of drivers in 2015 was estimated at 20,000. To calculate our 2017 pot we will therefore double this figure. This is crude, we admit, but Uber have increased their percentage of the fare taken from all drivers who signed up after 2015 to 25%.  This, plus the resulting data tables, show that the crudeness of our doubling probably doesn’t have a major effect on the result.

Total driver pot for 2017: £184,000,000

Constant three: the average percentage of ’full-time’ drivers

On Tuesday 28 September ORB International released a survey, commissioned by Uber, which contains a number of data points about the makeup of Uber’s UK driver base. The timing is likely not coincidental. One of those points is this:

More than four in five (82%) drivers say Uber is their main source of income with 10% saying it tops up other sources of income and 8% saying it is one of a few different main sources of income.

Indeed this figure is highlighted by the report as being particularly relevant to the current London debate by ORB Managing director, Jonny Heald, who says:

While Uber has been in the headlines for the past few days, we’ve heard little about the 40,000 drivers who could be impacted by the licence refusal. Our poll shows that four in five drivers rely on Uber as their main source of income.

We actually think this figure (82%) is very optimistic, so we’re actually going to aim lower, although our tables will ‘top out’ at 85%.

Total Full Time Equivalents (FTEs) in London: 60%

The variable: ‘full-time’ salary

We’ve used two salary figures for each of the following calculations to give a range of outcomes. These figures are:

The London living wage: £19,012.50
Uber Driver London’s upper estimate: £39,000 (Based on a 60 hour week, not adjusted for car payments or other operating costs. The take-home salary would likely be closer to £23,000)

The issues

All of these numbers likely include a margin for error. As the data tables below make clear, however, none of them work with anything approaching a reasonable salary estimate. In each case, the numbers are so far off that at least one of these public numbers (given by Uber or their proxy survey) have to be wrong.

A final note: when looking at these tables, remember that you need to allow for Part Time Equivalents (PTEs) within the total driver pot too. This is our unknown, and it is also something of a ‘Camel train in the desert’ problem – the more PTEs they are, the larger that pot likely needs to be.

Because of this, it’s not just about discarding the results that have a negative available pot, but also those results that are too close to the ‘break even’ point. The column ‘PT Average’ shows the estimated income of the remaining PTEs to provide some kind of sanity check here. We generally assume that an average in the region of £2,500 would be a reasonable PTE target.

Option 1: London FTEs are being exaggerated by a significant margin

If the driver numbers and driver pot are correct, then the number of drivers earning a ‘full-time’ wage in London is somewhere between 5 – 15% of the total pool. So 2,000 – 6,000 drivers.

FT Salary FT % Total Drivers Total FT Drivers Total Driver Income FT Driver Income PT Pot PT Average
19,012.50 85 40,000 34,000 184,000,000 646,425,000 -462,425,000 -77,070
19,012.50 80 40,000 32,000 184,000,000 608,400,000 -424,400,000 -53,050
19,012.50 75 40,000 30,000 184,000,000 570,375,000 -386,375,000 -38,637
19,012.50 70 40,000 28,000 184,000,000 532,350,000 -348,350,000 -29,029
19,012.50 65 40,000 26,000 184,000,000 494,325,000 -310,325,000 -22,166
19,012.50 60 40,000 24,000 184,000,000 456,300,000 -272,300,000 -17,018
19,012.50 55 40,000 22,000 184,000,000 418,275,000 -234,275,000 -13,015
19,012.50 50 40,000 20,000 184,000,000 380,250,000 -196,250,000 -9,812
19,012.50 45 40,000 18,000 184,000,000 342,225,000 -158,225,000 -7,192
19,012.50 40 40,000 16,000 184,000,000 304,200,000 -120,200,000 -5,008
19,012.50 35 40,000 14,000 184,000,000 266,175,000 -82,175,000 -3,160
19,012.50 30 40,000 12,000 184,000,000 228,150,000 -44,150,000 -1,576
19,012.50 25 40,000 10,000 184,000,000 190,125,000 -6,125,000 -204
19,012.50 20 40,000 8,000 184,000,000 152,100,000 31,900,000 996
19,012.50 15 40,000 6,000 184,000,000 114,075,000 69,925,000 2,056
19,012.50 10 40,000 4,000 184,000,000 76,050,000 107,950,000 2,998
19,012.50 5 40,000 2,000 184,000,000 38,025,000 145,975,000 3,841
19,012.50 0 40,000 0 184,000,000 0 184,000,000 4,600
FT Salary FT % Total Drivers Total FT Drivers Total Driver Income FT Driver Income PT Pot PT Average
39,000 85 40,000 34,000 184,000,000 1,326,000,000 -1,142,000,000 -190,333
39,000 80 40,000 32,000 184,000,000 1,248,000,000 -1,064,000,000 -133,000
39,000 75 40,000 30,000 184,000,000 1,170,000,000 -986,000,000 -98,600
39,000 70 40,000 28,000 184,000,000 1,092,000,000 -908,000,000 -75,666
39,000 65 40,000 26,000 184,000,000 1,014,000,000 -830,000,000 -59,285
39,000 60 40,000 24,000 184,000,000 936,000,000 -752,000,000 -47,000
39,000 55 40,000 22,000 184,000,000 858,000,000 -674,000,000 -37,444
39,000 50 40,000 20,000 184,000,000 780,000,000 -596,000,000 -29,800
39,000 45 40,000 18,000 184,000,000 702,000,000 -518,000,000 -23,545
39,000 40 40,000 16,000 184,000,000 624,000,000 -440,000,000 -18,333
39,000 35 40,000 14,000 184,000,000 546,000,000 -362,000,000 -13,923
39,000 30 40,000 12,000 184,000,000 468,000,000 -284,000,000 -10,142
39,000 25 40,000 10,000 184,000,000 390,000,000 -206,000,000 -6,866
39,000 20 40,000 8,000 184,000,000 312,000,000 -128,000,000 -4,000
39,000 15 40,000 6,000 184,000,000 234,000,000 -50,000,000 -1,470
39,000 10 40,000 4,000 184,000,000 156,000,000 28,000,000 777
39,000 5 40,000 2,000 184,000,000 78,000,000 106,000,000 2,789
39,000 0 40,000 0 184,000,000 0 184,000,000 4,600

Option 2: The number of drivers is being exaggerated by a significant margin

If the driver pot and the FTE percentage are correct, then the number of active drivers in London is between 7,500 – 15,000. This is well below the figure of 40,000 that Uber have circulated.

FT Salary FT % Total Drivers Total FT Drivers Total Driver Income FT Driver Income PT Pot PT Average
19,012.50 85 15,000 12,750 184,000,000 242,409,375 -58,409,375 -25,959
19,012.50 80 15,000 12,000 184,000,000 228,150,000 -44,150,000 -14,716
19,012.50 75 15,000 11,250 184,000,000 213,890,625 -29,890,625 -7,970
19,012.50 70 15,000 10,500 184,000,000 199,631,250 -15,631,250 -3,473
19,012.50 65 15,000 9,750 184,000,000 185,371,875 -1,371,875 -261
19,012.50 60 15,000 9,000 184,000,000 171,112,500 12,887,500 2,147
19,012.50 55 15,000 8,250 184,000,000 156,853,125 27,146,875 4,021
19,012.50 50 15,000 7,500 184,000,000 142,593,750 41,406,250 5,520
19,012.50 45 15,000 6,750 184,000,000 128,334,375 55,665,625 6,747
19,012.50 40 15,000 6,000 184,000,000 114,075,000 69,925,000 7,769
19,012.50 35 15,000 5,250 184,000,000 99,815,625 84,184,375 8,634
19,012.50 30 15,000 4,500 184,000,000 85,556,250 98,443,750 9,375
19,012.50 25 15,000 3,750 184,000,000 71,296,875 112,703,125 10,018
19,012.50 20 15,000 3,000 184,000,000 57,037,500 126,962,500 10,580
19,012.50 15 15,000 2,250 184,000,000 42,778,125 141,221,875 11,076
19,012.50 10 15,000 1,500 184,000,000 28,518,750 155,481,250 11,517
19,012.50 5 15,000 750 184,000,000 14,259,375 169,740,625 11,911
19,012.50 0 15,000 0 184,000,000 0 184,000,000 12,266
FT Salary FT % Total Drivers Total FT Drivers Total Driver Income FT Driver Income PT Pot PT Average
39,000 85 7,500 6,375 184,000,000 248,625,000 -64,625,000 -57,444
39,000 80 7,500 6,000 184,000,000 234,000,000 -50,000,000 -33,333
39,000 75 7,500 5,625 184,000,000 219,375,000 -35,375,000 -18,866
39,000 70 7,500 5,250 184,000,000 204,750,000 -20,750,000 -9,222
39,000 65 7,500 4,875 184,000,000 190,125,000 -6,125,000 -2,333
39,000 60 7,500 4,500 184,000,000 175,500,000 8,500,000 2,833
39,000 55 7,500 4,125 184,000,000 160,875,000 23,125,000 6,851
39,000 50 7,500 3,750 184,000,000 146,250,000 37,750,000 10,066
39,000 45 7,500 3,375 184,000,000 131,625,000 52,375,000 12,696
39,000 40 7,500 3,000 184,000,000 117,000,000 67,000,000 14,888
39,000 35 7,500 2,625 184,000,000 102,375,000 81,625,000 16,743
39,000 30 7,500 2,250 184,000,000 87,750,000 96,250,000 18,333
39,000 25 7,500 1,875 184,000,000 73,125,000 110,875,000 19,711
39,000 20 7,500 1,500 184,000,000 58,500,000 125,500,000 20,916
39,000 15 7,500 1,125 184,000,000 43,875,000 140,125,000 21,980
39,000 10 7,500 750 184,000,000 29,250,000 154,750,000 22,925
39,000 5 7,500 375 184,000,000 14,625,000 169,375,000 23,771
39,000 0 7,500 0 184,000,000 0 184,000,000 24,533

Option 3: the amount of money generated by Uber in London is significantly greater than ULL accounts show

If the number of active drivers and FTE percentage are correct, then the profits ‘booked’ by ULL cannot account for the total required size of the driver pot. This would need to be somewhere between £500m – £980m

If this were the case, this would suggest that the ULL figures do not represent the ‘banked’ revenue total for London Uber fares. Instead it would mean that Uber B.V. – the Dutch subsidiary – is currently banking somewhere between £625,000,000 and £1.2bn in fare revenue, for London alone, every year. Ten times the stated turnover of ULL.

FT Salary FT % Total Drivers Total FT Drivers Total Driver Income FT Driver Income PT Pot PT Average
19,012.50 85 40,000 34,000 500,000,000 646,425,000 -146,425,000 -24,404
19,012.50 80 40,000 32,000 500,000,000 608,400,000 -108,400,000 -13,550
19,012.50 75 40,000 30,000 500,000,000 570,375,000 -70,375,000 -7,037
19,012.50 70 40,000 28,000 500,000,000 532,350,000 -32,350,000 -2,695
19,012.50 65 40,000 26,000 500,000,000 494,325,000 5,675,000 405
19,012.50 60 40,000 24,000 500,000,000 456,300,000 43,700,000 2,731
19,012.50 55 40,000 22,000 500,000,000 418,275,000 81,725,000 4,540
19,012.50 50 40,000 20,000 500,000,000 380,250,000 119,750,000 5,987
19,012.50 45 40,000 18,000 500,000,000 342,225,000 157,775,000 7,171
19,012.50 40 40,000 16,000 500,000,000 304,200,000 195,800,000 8,158
19,012.50 35 40,000 14,000 500,000,000 266,175,000 233,825,000 8,993
19,012.50 30 40,000 12,000 500,000,000 228,150,000 271,850,000 9,708
19,012.50 25 40,000 10,000 500,000,000 190,125,000 309,875,000 10,329
19,012.50 20 40,000 8,000 500,000,000 152,100,000 347,900,000 10,871
19,012.50 15 40,000 6,000 500,000,000 114,075,000 385,925,000 11,350
19,012.50 10 40,000 4,000 500,000,000 76,050,000 423,950,000 11,776
19,012.50 5 40,000 2,000 500,000,000 38,025,000 461,975,000 12,157
19,012.50 0 40,000 0 500,000,000 0 500,000,000 12,500
FT Salary FT % Total Drivers Total FT Drivers Total Driver Income FT Driver Income PT Pot PT Average
39,000 85 40,000 34,000 980,000,000 1,326,000,000 -346,000,000 -57,666
39,000 80 40,000 32,000 980,000,000 1,248,000,000 -268,000,000 -33,500
39,000 75 40,000 30,000 980,000,000 1,170,000,000 -190,000,000 -19,000
39,000 70 40,000 28,000 980,000,000 1,092,000,000 -112,000,000 -9,333
39,000 65 40,000 26,000 980,000,000 1,014,000,000 -34,000,000 -2,428
39,000 60 40,000 24,000 980,000,000 936,000,000 44,000,000 2,750
39,000 55 40,000 22,000 980,000,000 858,000,000 122,000,000 6,777
39,000 50 40,000 20,000 980,000,000 780,000,000 200,000,000 10,000
39,000 45 40,000 18,000 980,000,000 702,000,000 278,000,000 12,636
39,000 40 40,000 16,000 980,000,000 624,000,000 356,000,000 14,833
39,000 35 40,000 14,000 980,000,000 546,000,000 434,000,000 16,692
39,000 30 40,000 12,000 980,000,000 468,000,000 512,000,000 18,285
39,000 25 40,000 10,000 980,000,000 390,000,000 590,000,000 19,666
39,000 20 40,000 8,000 980,000,000 312,000,000 668,000,000 20,875
39,000 15 40,000 6,000 980,000,000 234,000,000 746,000,000 21,941
39,000 10 40,000 4,000 980,000,000 156,000,000 824,000,000 22,888
39,000 5 40,000 2,000 980,000,000 78,000,000 902,000,000 23,736
39,000 0 40,000 0 980,000,000 0 980,000,000 24,500

So what does all this mean?

Our intention here is not to post a ‘gotcha’. Our assumption is that there is a mistake in our maths. If so, we can’t see it but we will be quick to correct when it is pointed out.

If not, then there are serious questions to be asked about the numbers that Uber have been using or implying in the current debate. Should Uber wish to provide us with better numbers, we would be very grateful indeed. In the meantime, it is likely worth considering Uber’s ‘affected drivers’ figure and narrative with a considerable amount of caution.

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Written by John Bull